UPSC Prelims 2016 Q11: Indian Economy – International Trade & WTO

UPSC Prelims 2016, General Studies Paper I · Indian Economy

In the context of which of the following do you sometimes find the terms 'amber box', 'blue box' and 'green box' in the news?

Answer: (a) WTO affairs

Explanation

Amber box, blue box and green box

These are categories of farm subsidies under the WTO Agreement on Agriculture.

Box	Type of subsidy	Limit
Amber box	Trade-distorting support, such as price support	Capped: 5 percent of output for developed and 10 percent for developing countries (de minimis)
Blue box	Amber-type support that also limits production	No cap at present
Green box	Non-distorting or minimally distorting support: research, extension, food security stocks	No limit

There is also a Development box (Article 6.2).

It lets developing countries give input and investment subsidies to poor farmers.

India's minimum support price falls in the amber box, which is why public stockholding is debated at the WTO.

Answer: (a) WTO affairs.

(a) CORRECT. The amber, blue and green boxes are subsidy categories in WTO farm rules.
(b) Incorrect. SAARC has no such classification of subsidies.
(c) Incorrect. The UNFCCC deals with climate change, not farm subsidy boxes.
(d) Incorrect. The India-EU trade talks do not use these terms.

WTO Agreement on Agriculture: amber box (distorting, capped), blue box (production-limiting), green box (non-distorting, no limit).

Amber, blue, green boxes = WTO farm subsidies.

Linking 'green box' to climate change and the UNFCCC.
Thinking the colours work like traffic lights with a red box; there is none.
Placing India's price support in the green box; it is amber.

Amber = slow down (capped). Green = go (no limit). Blue = amber with production limits.

World Trade Organization — Agreement on Agriculture: domestic support boxes
NCERT Class XI — Indian Economic Development (Liberalisation, Privatisation and Globalisation)